Nassau’s Foreclosure Clinic – A View From the Trenches

Every month since March 2009, Nassau County Bar Association attorneys have volunteered to assist Nassau homeowners concerned about mortgage foreclosure, helping over 2,000 families with advice and strategies to keep their homes during one of the worst recessions in modern history. Organized by NCBA members Caryle Katz and Gale Berg, the clinics are held the first Monday of every month at the Bar Association’s headquarters in Mineola, NY.

NCBA’s unique program allows homeowners concerned about foreclosure matters or are already in the foreclosure process involving property in Nassau County, to meet one-on-one with a volunteer attorney for free legal guidance, to receive loan modification assistance and bankruptcy information – all in one room. The program is made possible in part by grants from the NYS Office of the Attorney General. I have been a participating for about a year now assisting as a Spanish interpreter (I know nothing about this area of the law) when needed. The experience has been a real eye-opener about the need for legal services for the poor and the depth and severity of the foreclosure crisis.

New York State Chief Judge Jonathan Lippman had proposed a $100 million increase in state financing for lawyers who represent the poor in civil cases that deal with “the essentials of life” such as eviction and child support. The proposal was to be phased in over four years, with an increase of $25 million beginning next year. $15 Million was approved for this year instead. Having the indigent represent themselves (as happens in 95% of landlord-tenant, foreclosure and child custody matters) severely slows the process down. As any attorney who has ever had to litigate against a pro se party, you know that it is much more efficient if both sides have competent counsel – you can get right down to the issues.

That was evident at the clinic as homeowners were fighting for years to save their homes without a clear understanding of their options and best strategies. They leave the clinic knowing their rights and their obligations and with a battle plan that best suits them. The other striking thing is how banks and mortgage brokers got us all into this mess. Family after family tells almost the same story. They heard about loans for first time homebuyers in areas like Uniondale, Hempstead, and Freeport. The homes were priced in the $330,000 range. They did not have to put any money down. No income verification. First ten years are interest only payments then a balloon payment would be owed of about $50-75,000. Don’t worry, if you could not afford that, the home value would have increased that much in that time, so just re-finance! Just sign this piece of paper and you get your dream home. I guess the banks were counting on the real estate market continuing to rise so that they would either get the payments or the properties when people started to fall behind.

Only now, those homes are worth $150-195,000. With $300,000 in mortgage on top of them. So the banks are forced to sell the houses in a short sale or work out new loans with their customers or take the deed back and have the former homeowners become tenants, renting the very same house they used to own at about half of the cost of their mortgage payment. Many homeowners are gaining a windfall- staying in the home for three years or more and not paying a dime towards the mortgage, just paying utilities. The banks keep paying the real estate taxes for fear of tax liens, so if you don’t care about your credit rating, its really not such a bad deal. What is ironic and troubling is that many folks come to the clinic looking for information on how to refinance as they struggle to keep up with the payments. Many times they are told that the banks will not talk to them about refinancing until they are in default – so if they want help, they need to stop paying and get into default status and foreclosure mode. Non-sensical to me , but what do I know, I just interpret.

The NCBA also has clinics that help victims of Hurricane Sandy, the elderly and indigent veterans. So many people leave the clinic with a sense of relief – even if they found out there is no way of saving their home- the uncertainty and dread of the court proceedings filled them with anxiety. Having a lawyer explain the situation and their options settles them down and gets them focused on doing all they can to help their circumstances. It’s a clear example of what lawyers do best for people – navigate the legal waters and chart a course to the safest harbor available. Kudos to Caryle Katz and Gale Berg for being the driving forces behind this initiative – it should be a model for Bar Associations around the State.